1. Chapter 1
MANAGING THE
DIGITAL FIRM

2. OBJECTIVES
 What is the role of information systems in today’s
competitive business environment?
 What exactly is an information system? What do
managers need to know about information
systems?
 How are information systems transforming
organizations and management?

3. OBJECTIVES
 How has the Internet and Internet technology
transformed business?
 What are the major management challenges to
building and using information systems?

4. MIS: Management Information System
 An organized approach to the study of the information needs of an
organization's management at every level in making operational,
tactical, and strategic decisions. Its objective is to design and
implement procedures, processes, and routines that provide
suitably detailed reports in an accurate, consistent, and timely
manner.
 In a management information system, modern, computerized
systems continuously gather relevant data, both from inside and
outside an organization. This data is then processed, integrated, and
stored in a centralized database (or data warehouse) where it is
constantly updated and made available to all who have the
authority to access it, in a form that suits their purpose.

5. MIS: Management Information System
MIS (management information systems) is a general term for the
computer systems in an enterprise that provide information about
its business operations. It's also used to refer to the people who
manage these systems. Typically, in a large corporation, "MIS" or the
"MIS department" refers to a central or centrally-coordinated
system of computer expertise and management, often including
mainframe systems but also including by extension the
corporation's entire network of computer resources.

6. WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Four powerful worldwide changes that
have altered the business environment:
1. Emergence of the Global Economy
2. Transformation of Industrial Economies
3. Transformation of the Business Enterprise
4. The Emerging Digital Firm

7. WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Emergence of the Global Economy
 Management and control in a global
marketplace
 Competition in world markets
 Global work groups
 Global delivery systems

8. WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Transformation of Industrial Economies
 Knowledge- and information-based economies
 Productivity
 New products and services
 Knowledge: a central productive and strategic
asset

9. WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Transformation of Industrial Economies
 Time-based competition
 Shorter product life
 Turbulent environment
 Limited employee knowledge base

10. WHY INFORMATION SYSTEMS?
Labor Force Composition 1900-1997
Figure 1-1

11. WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Transformation of the Business Enterprise
 Flattening
 Decentralization
 Flexibility
 Location independence
 Low transaction and coordination costs
 Empowerment
 Collaborative work and teamwork

12. WHY INFORMATION SYSTEMS?
The Competitive Business Environment and the Emerging Digital Firm
Emergence of the Digital Firm
 Digitally-enabled relationships with customers,
suppliers, and employees
 Core business processes accomplished via
digital networks
 Digital management of key corporate assets
 Rapid sensing and responding to environmental
changes

13. WHY INFORMATION SYSTEMS?
What Is an Information System?
A set of interrelated components that collect
(or retrieve), process, store, and distribute
information to support decision making and
control in an organization

14. WHY INFORMATION SYSTEMS?
What Is an Information System?
 Data: Streams of raw facts representing events
such as business transactions
 Information: Clusters of facts that are
meaningful and useful to human beings in the
processes such as making decisions

15. WHY INFORMATION SYSTEMS?
What Is an Information System?
Data and Information
Figure 1-2

16. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Activities in an Information System
INPUT PROCESS OUTPUT
FEEDBACK

17. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Functions of an Information System
Figure 1-3

18. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Computer-Based Information System (CBIS)
 Rely on computer hardware and software
 Processing and disseminating information

19. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Formal Systems
 Fixed definitions of data, procedures
 Collecting, storing, processing, disseminating,
using data

20. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
A Business Perspective on Information Systems
 An organizational and management solution
 Based on information technology
 To a challenge posed by the environment

21. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Information Systems
ORGANIZATIONS TECHNOLOGY
INFORMATION
SYSTEMS
MANAGEMENT
Figure 1-4

22. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
A Business Perspective on Information Systems
 Information systems literacy: Broad-based
understanding of information systems that includes
behavioral knowledge about organizations and
individuals using information systems as well as
technical knowledge about computers.
 Computer literacy: Knowledge about information
technology, focusing on under-standing how
computer-based technologies work

23. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Major Business Functions
 Sales and marketing
 Manufacturing
 Finance
 Accounting
 Human resources

24. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Organizations
Key Elements:
 People: Managers, knowledge workers, data
workers, production or service workers
 Structure: Organization chart , groups of
specialists, products, geography

25. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Organizations
 Operating procedures: Standard operating
procedures (SOP, rules for action)
 Politics: Power to persuade, get things done
 Culture: Customs of behavior

26. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Management
Levels:
 Senior managers: make long-range strategic
decisions about products and services
 Middle managers: Carry out the programs and
plans of senior management
 Operational managers: monitor the firm’s daily
activities

27. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Computer Technology
Tools managers use to cope with change
 Hardware: Physical equipment
 Software: Detailed preprogrammed instructions
 Storage: Physical media for
storing data and the software

28. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
WHY INFORMATION SYSTEMS?
Computer Technology
 Communications Technology: transfers data
from one physical location to another
 Networks: link computers to share data or
resources

29. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
TECHNICAL APPROACHES
COMPUTER
OPERATIONS
SCIENCE
RESEARCH
MANAGEMENT
SCIENCE
MIS
SOCIOLOGY
PSYCHOLOGY POLITICAL SCIENCE
BEHAVIORAL APPROACHES
Figure 1-5

30. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
Socio-Technical Systems
Optimize systems performance:
 Technology and organization
 Organizations mutually adjust to one another until
fit is satisfactory

31. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS
Socio-technical Systems
Figure 1-6 SOURCE: Liker, et al, 1987

32. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
The Interdependence Between Organizations and Information Systems
Figure 1-7

33. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
THE NETWORK REVOLUTION AND THE INTERNET
The Widening Scope of Information Systems
 1950s: Technical changes
 60s-70s: Managerial controls
 80s-90s: Institutional core activities
Growing Importance

34. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
THE NETWORK REVOLUTION AND THE INTERNET
The Widening Scope of Information Systems
Figure 1-8

35. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
What You Can Do on the Internet
 Communicate and collaborate
 Access information
 Participate in discussions
 Supply information
 Find entertainment
 Exchange business transactions

36. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
New Options for Organizational Design
 Flattening organizations
 Separating work from location
 Reorganizing work-flows
 Increasing flexibility
 Redefining organizational boundaries

37. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Flattening Organizations Information Systems
Figure 1-9

38. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Redesigned Work Flow For Insurance Underwriting
Figure 1-10

39. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
The Digital Firm
 Electronic commerce
 Electronic business
 Electronic market: Information systems links,
buyers and sellers to exchange information,
products, services, payments

40. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Figure 1-11

41. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Electronic Commerce
 Internet links buyers, sellers
 Lower transaction costs
 Goods and services advertised, bought,
exchanged worldwide
 Business-to-business transactions increasing

42. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Electronic Business
 Internet: Business builds private, secure
network
 E-mail, Web documents, group software:
Extends effective communication and control
 Extranet: Extension of intranet to authorized
external users

43. Essentials of Management Information Systems
Chapter 1 Managing the Digital Firm
TOWARD THE DIGITAL FIRM
Information Architecture and Information Technology Infrastructure
Figure 1-12

44. Chapter 1
MANAGING THE
DIGITAL FIRM